What changed in this filing

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Item 1. Financial Statements

2024-08-08 compared with 2024-05-09 · 83 added, 61 removed, 289 unchanged (33% of the section changed)

24 unchanged sentences

50,000,000 shares authorized;

11,372,878 and 11,416,212 shares outstanding as of March 31, 2024 and December 31, 2023, respectively

11,127,878 and 11,416,212 shares outstanding as of June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

8 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Cost of goods sold, excluding depreciation and amortization

18 unchanged sentences

For the Three Months Ended

Other comprehensive income - foreign currency translation gain

For the Six Months Ended

Other comprehensive income - foreign currency translation gain (loss)

Comprehensive income

2 unchanged sentences

Condensed Consolidated Statements of Shareholders ’ Equity (Unaudited)

For the Three Months Ended March 31, 2024

For the Six Months Ended June 30, 2024

Comprehensive

7 unchanged sentences

Balance as of March 31, 2024

For the Three Months Ended March 31, 2023

Common stock repurchased and retired

Treasury stock excise tax

Stock-based compensation expense

Total comprehensive loss

Balance as of June 30, 2024

For the Six Months Ended June 30, 2023

Comprehensive

4 unchanged sentences

Options exercised

Total comprehensive loss

Total comprehensive income

Balance as of March 31, 2023

Common stock repurchased and retired

Treasury stock excise tax

Stock-based compensation expense

Options exercised

Total comprehensive income

Balance as of June 30, 2023

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows (Unaudited)

For the Three Months Ended March 31,

For the Six Months Ended

Cash Flows From Operating Activities:

Adjustments to reconcile net income to net cash and cash equivalents used in operating activities:

Adjustments to reconcile net income to net cash and cash equivalents provided by (used in) operating activities:

Stock-based compensation

9 unchanged sentences

Lease liabilities

Net cash and cash equivalents used in operating activities

Net cash and cash equivalents provided by (used in) operating activities

Cash Flows From Investing Activities:

6 unchanged sentences

Decrease in cash and cash equivalents

Cash and cash equivalents, beginning of the year

Cash and cash equivalents, end of the year

Cash and cash equivalents, beginning of the period

Cash and cash equivalents, end of the period

Supplemental disclosure of non-cash transactions:

6 unchanged sentences

The Company accomplishes this by developing, manufacturing and marketing a line of building supply products for the new home and re-roofing markets and a line of disposable protective apparel for the cleanroom, industrial, pharmaceutical, medical and dental markets.

The Building Supply segment consists of construction weatherization products, such as housewrap, housewrap accessories, namely tape and flashing, synthetic roof underlayment and synthetic roof underlayment accessories, namely self-adhered underlayment, as well as other woven material.

The Building Supply segment consists of construction weatherization products, such as housewrap, housewrap accessories including window and door flashing, and seam tape, synthetic roof underlayment and synthetic roof underlayment accessories, as well as other woven materials.

The Disposable Protective Apparel segment consists of a complete line of disposable protective garments (shoecovers, bouffant caps, coveralls, gowns, frocks and lab coats), face masks and face shields.

All of our disposable protective apparel products, including face masks and face shields, are sold through similar distribution channels, are single-use and disposable, have the purpose of protecting people, products and environments, and have to be produced in Food and Drug Administration (“FDA”) approved facilities, regardless of the market served.

All of our disposable protective apparel products, including face masks and face shields, are sold through similar distribution channels, are single-use and disposable, have the purpose of protecting people, products and environments, and have to be produced in Food and Drug Administration approved facilities, regardless of the market served.

The Company’s products are sold under the “Alpha Pro Tech” brand name as well as under private label and are predominantly sold in the United States of America (“U.S.”).

5 unchanged sentences

The interim condensed consolidated financial statements should be read in conjunction with the Company’s current year SEC filings, as well as the Company’s consolidated financial statements for the year ended December 31, 2023, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”), filed with the SEC on March 13, 2024.

The results of operations for the three months ended March 31, 2024, in this Quarterly Report on Form 10-Q are not necessarily indicative of the results to be expected for the full year.

The results of operations for the three and six months ended June 30, 2024, in this Quarterly Report on Form 10-Q are not necessarily indicative of the results to be expected for the full year.

The condensed consolidated balance sheet as of December 31, 2023 was prepared using information from the audited consolidated balance sheet contained in the 2023 Form 10-K;

14 unchanged sentences

The Company manufactures certain private label goods for customers and has determined that control does not pass to the customer at the time of manufacture, based upon the nature of the private labeling.

The Company has determined as of March 31, 2024, that it had no material contract assets, and concluded that its contract liabilities (primarily rebates) had the right of offset against customer receivables.

The Company has determined as of June 30, 2024, that it had no material contract assets, and concluded that its contract liabilities (primarily rebates) had the right of offset against customer receivables.

See Note 10 and Note 11 of these Notes to Condensed Consolidated Financial Statements (Unaudited) for information on revenue disaggregated by type and by geographic region.

3 unchanged sentences

Repurchase Program

During the three months ended March 31, 2024, the Company repurchased and retired 270,000 shares of its common stock for $ 1,417,000 .

During the three months ended March 31, 2023, the Company repurchased and retired 200,000 shares of its common stock for $ 833,000 .

As of March 31, 2024, the Company had $ 777,000 available to repurchase common shares under the repurchase program.

During the three months ended June 30, 2024, the Company repurchased and retired 245,000 shares of its common stock for $ 1,284,000 .

During the three months ended June 30, 2023, the Company repurchased and retired 275,000 shares of its common stock for $ 1,097,000 .

During the six months ended June 30, 2024, the Company repurchased and retired 515,000 shares of its common stock for $ 2,701,000 .

During the six months ended June 30, 2023, the Company repurchased and retired 475,000 shares of its common stock for $ 1,930,000 .

As of June 30, 2024, the Company had $ 1,493,000 available to repurchase common shares under the repurchase program.

The excess of repurchase price over par value is allocated between additional paid-in capital and retained earnings.

3 unchanged sentences

The 2004 Plan provided for a total of 5,000,000 common shares eligible for issuance.

Under the 2004 Plan, approximately 5,009,750 options (taking into account cancelled and expired options that were added back to the plan reserve) had been granted as of December 31, 2020.

Under the 2004 Plan, approximately 5,009,750 options (taking into account cancelled, forfeited and expired options that were added back to the plan reserve) had been granted as of December 31, 2020.

At the Company’s 2020 Annual Meeting of Shareholders held on June 9, 2020, the Company’s shareholders approved the Alpha Pro Tech, Ltd.

1 unchanged sentence

The 2020 Incentive Plan provides for the grant of incentive and nonqualified stock options, stock appreciation rights, awards of restricted stock and restricted stock units, performance share awards, cash awards and other equity-based awards to employees (including officers), consultants and non-employee directors of the Company and its affiliates.

A total of 1,800,000 shares of the Company’s common stock are reserved for issuance under the 2020 Incentive Plan, plus the number of shares underlying any award granted under the 2004 Option Plan that expires, terminates or is cancelled or forfeited under the terms of the 2004 Option Plan.

A total of 1,800,000 shares of the Company’s common stock are reserved for issuance under the 2020 Incentive Plan, plus the number of shares underlying any award granted under the 2004 Option Plan that expires or is cancelled or forfeited under the terms of the 2004 Option Plan.

As a result of the approval of the 2020 Incentive Plan, no future equity awards will be made pursuant to the 2004 Option Plan.

1 unchanged sentence

The Company records compensation expense for the fair value of stock-based awards determined as of the grant date, including employee stock options and restricted stock awards, over the determined requisite service period, which is generally ratably over the vesting term.

The following table summarizes restricted stock awards activity for the three months ended March 31, 2024:

The following table summarizes restricted stock awards activity for the six months ended June 30, 2024:

Weighted Average

3 unchanged sentences

Granted to employees and non-employee directors

Outstanding, March 31, 2024

Outstanding, June 30, 2024

During the six months ended June 30, 2024 and 2023, 10,715 and 0 restricted stock awards were granted under the 2020 Incentive Plan, respectively.

The Company recognized $ 189,000 and $ 37,000 in compensation expense associated with outstanding restricted stock awards for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, $ 746,000 of total unrecognized compensation cost related to the restricted stock grants was expected to be recognized over a weighted average remainder period of 2.18 years.

Alpha Pro Tech, Ltd.

Notes to Condensed Consolidated Financial Statements (Unaudited)

During the three months ended March 31, 2024, and 2023, 10,715 and 0 restricted stock awards were granted under the 2020 Incentive Plan, respectively.

The Company recognized $ 94,000 and $ 18,000 in compensation expense associated with outstanding restricted stock awards for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, $ 840,000 of total unrecognized compensation cost related to the restricted stock grants was expected to be recognized over a weighted average remainder period of 2.39 years.

For the three months ended March 31, 2024 and 2023, no stock options were granted under the 2004 Option Plan or the 2020 Incentive Plan.

The Company recognized $ 15,000 and $ 3,000 in stock-based compensation expense for the three months ended March 31, 2024 and 2023, respectively, related to outstanding options previously granted under the 2004 Option Plan.

For the six months ended June 30, 2024 and 2023, no stock options were granted under the 2020 Incentive Plan.

The Company recognized $ 29,000 and $ 7,000 in stock-based compensation expense for the six months ended June 30, 2024 and 2023, respectively, related to outstanding options previously granted under the 2004 Option Plan.

The Company uses the Black-Scholes option-pricing model to value the options.

4 unchanged sentences

The Company accounts for option forfeitures as they occur.

The following table summarizes option activity for the three months ended March 31, 2024:

The following table summarizes option activity for the six months ended June 30, 2024:

Weighted Average

1 unchanged sentence

Options outstanding, December 31, 2023

Options outstanding, March 31, 2024

Options exercisable, March 31, 2024

As of March 31, 2024, $ 132,000 of total unrecognized compensation cost related to the stock option grants was expected to be recognized over a weighted average remainder period of 2.25 years.

Options outstanding, June 30, 2024

Options exercisable, June 30, 2024

As of June 30, 2024, $ 117,000 of total unrecognized compensation cost related to the stock option grants was expected to be recognized over a weighted average remainder period of 2.06 years.

Recent Accounting Pronouncements

13 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of March 31, 2024 and December 31, 2023, inventories net of reserves consisted of the following:

As of June 30, 2024 and December 31, 2023, inventories net of reserves consisted of the following:

Raw materials

22 unchanged sentences

The Company periodically reviews its investment in Harmony for impairment.

Management has determined that no impairment was required as of March 31, 2024, or December 31, 2023.

Management has determined that no impairment was required as of June 30, 2024, or December 31, 2023.

Under the equity method, since the Company’s reporting currency is different from of Harmony’s reporting currency, the Company is required to translate our proportionate share of equity for effects of translations in foreign currency and adjust the investment accordingly and accrue the adjustment as a component of Accumulated other comprehensive loss (“AOCL”).

For the three months ended March 31, 2024 and 2023, the Company purchased $ 5,329,000 and $ 5,036,000 of inventories, respectively, from Harmony.

For both three months ended March 31, 2024 and 2023, the Company sold $ 0 of inventories, to Harmony.

For the three months ended March 31, 2024 and 2023, the Company recorded equity in income of unconsolidated affiliate of $ 138,000 and $ 109,000 , respectively, related to Harmony.

For the three months ended June 30, 2024 and 2023, the Company purchased $ 5,849,000 and $ 4,834,000 of inventories, respectively, from Harmony.

For the six months ended June 30, 2024 and 2023, the Company purchased $ 11,179,000 and $ 9,870,000 of inventories, respectively, from Harmony.

For the three months ended June 30, 2024 and 2023, the Company sold $ 240,000 and $ 200,000 of inventories, respectively, to Harmony.

For the six months ended June 30, 2024 and 2023, the Company sold $ 240,000 and $ 200,000 of inventories, respectively, to Harmony.

For the three months ended June 30, 2024 and 2023, the Company recorded equity in income of unconsolidated affiliate of $ 200,000 and $ 103,000 , respectively, related to Harmony.

For the six months ended June 30, 2024 and 2023, the Company recorded equity in income of unconsolidated affiliate of $ 338,000 and $ 212,000 , respectively, related to Harmony.

Alpha Pro Tech, Ltd.

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of March 31, 2024, the Company’s investment in Harmony was $ 5,391,000 , which consisted of its original $ 1,450,000 investment and cumulative equity in income of unconsolidated affiliate of $ 6,391,000 , less $ 942,000 in repayments of an advance, $ 77,000 in payments of dividends, and $ 1,431,000 in AOCL on foreign currency translations.

As of June 30, 2024, the Company’s investment in Harmony was $ 5,533,000 , which consisted of its original $ 1,450,000 investment and cumulative equity in income of unconsolidated affiliate of $ 6,591,000 , less $ 942,000 in repayments of an advance, $ 77,000 in payments of dividends, and $ 1,489,000 in AOCL on foreign currency translations.

Accrued Liabilities

As of March 31, 2024 and December 31, 2023, accrued liabilities consisted of the following:

As of June 30, 2024 and December 31, 2023, accrued liabilities consisted of the following:

Payroll expenses and taxes payable

2 unchanged sentences

Basic and Diluted Earnings Per Common Share

The following table provides a reconciliation of both net income and the number of shares used in the computation of “basic” earnings per common share (“EPS”), which utilizes the weighted average number of common shares outstanding without regard to dilutive shares, and “diluted” EPS, which includes all such dilutive shares, for the three months ended March 31, 2024 and 2023:

For the Three Months Ended

For the Six Months Ended

Net income (numerator)

7 unchanged sentences

The resulting foreign currency translation gains or losses are deferred as AOCL and reclassified to earnings only upon sale or liquidation of that business.

The AOCL on equity in unconsolidated affiliate was $ 1,431,000 and $ 1,437,000 as of March 31, 2024 and December 31, 2023, respectively.

Alpha Pro Tech, Ltd.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The AOCL on equity in unconsolidated affiliate was $ 1,489,000 and $ 1,437,000 as of June 30, 2024 and December 31, 2023, respectively.

Activity of Business Segments

3 unchanged sentences

The majority of the Company’s equity in income of unconsolidated affiliate (Harmony) is included in the total segment income for the Building Supply segment.

Alpha Pro Tech, Ltd.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(2) Disposable Protective Apparel :

4 unchanged sentences

The accounting policies of the segments are the same as those described previously under Summary of Significant Accounting Policies (see Note 3 in the notes to our consolidated financial statements in Item 8 of the 2023 Form 10-K).

The following table presents consolidated net sales for each segment for the three months ended March 31, 2024 and 2023:

The following table presents consolidated net sales for each segment for the three and six months ended June 30, 2024 and 2023:

For the Three Months Ended

For the Six Months Ended

Building Supply

1 unchanged sentence

Consolidated net sales

The following table presents the reconciliation of consolidated segment income to consolidated net income for the three months ended March 31, 2024 and 2023:

The following table presents the reconciliation of consolidated segment income to consolidated net income for the three and six months ended June 30, 2024 and 2023:

For the Three Months Ended

For the Six Months Ended

Building Supply

6 unchanged sentences

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table presents the consolidated net property and equipment, goodwill and definite-lived intangible assets (“consolidated assets”) by segment as of March 31, 2024 and December 31, 2023:

The following table presents the consolidated net property and equipment, goodwill and definite-lived intangible assets (“consolidated assets”) by segment as of June 30, 2024 and December 31, 2023:

Building Supply

4 unchanged sentences

Financial Information about Geographic Areas

The following table summarizes the Company’s net sales by geographic region for the three months ended March 31, 2024 and 2023:

The following table summarizes the Company’s net sales by geographic region for the three and six months ended June 30, 2024 and 2023:

For the Three Months Ended

For the Six Months Ended

Net sales by geographic region

3 unchanged sentences

Net sales by geographic region are based on the countries in which our customers are located.

For the three months ended March 31, 2024 and 2023, the Company did not generate sales from any single country, other than the United States, that were significant to the Company’s consolidated net sales.

The following table summarizes the locations of the Company’s long-lived assets by geographic region as of March 31, 2024 and December 31, 2023:

For the six months ended June 30, 2024 and 2023, the Company did not generate sales from any single country, other than the United States, that were significant to the Company’s consolidated net sales.

The following table summarizes the locations of the Company’s long-lived assets by geographic region as of June 30, 2024 and December 31, 2023:

Long-lived assets by geographic region

3 unchanged sentences

Related Party Transactions

As of March 31, 2024, the Company had no related party transactions, other than the Company’s transactions with its unconsolidated affiliate, Harmony.

As of June 30, 2024, the Company had no related party transactions, other than the Company’s transactions with its unconsolidated affiliate, Harmony.

See Note 6 of these Notes to Condensed Consolidated Financial Statements (Unaudited).

The Company has operating leases for the Company’s corporate office and manufacturing facilities, which expire at various dates through 2034.

The Company’s primary operating lease commitments as of June 30, 2024, related to the Company’s manufacturing facilities in Valdosta, Georgia, Nogales, Arizona and Salt Lake City, Utah, as well as the Company’s corporate headquarters in Aurora, Ontario, Canada.

Alpha Pro Tech, Ltd.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The Company has operating leases for the Company’s corporate office and manufacturing facilities, which expire at various dates through 2034.

The Company’s primary operating lease commitments as of March 31, 2024, related to the Company’s manufacturing facilities in Valdosta, Georgia, Nogales, Arizona and Salt Lake City, Utah, as well as the Company’s corporate headquarters in Aurora, Ontario, Canada.

As of March 31, 2024, the Company had operating lease right-of-use assets of $ 9,451,000 and operating lease liabilities of $ 9,465,000 .

As of March 31, 2024, we did not have any finance leases recorded on the Company’s consolidated balance sheet.

Operating lease expense was approximately $ 370,000 during the three months ended March 31, 2024.

The aggregate future minimum lease payments and reconciliation to lease liabilities as of March 31, 2024 were as follows:

Remaining nine months of 2024

As of June 30, 2024, the Company had operating lease right-of-use assets of $ 9,179,000 and operating lease liabilities of $ 9,207,000 .

As of June 30, 2024, we did not have any finance leases recorded on the Company’s consolidated balance sheet.

Operating lease expense was approximately $ 853,000 during the six months ended June 30, 2024.

The aggregate future minimum lease payments and reconciliation to lease liabilities as of June 30, 2024 were as follows:

Remaining six months of 2024

Total future minimum lease payments

1 unchanged sentence

Total lease liabilities

As of March 31, 2024, the weighted average remaining lease term of the Company’s operating leases was 10.46 years.

During the three months ended March 31, 2024, the weighted average discount rate with respect to these leases was 6.99 %.

As of June 30, 2024, the weighted average remaining lease term of the Company’s operating leases was 10.40 years.

During the six months ended June 30, 2024, the weighted average discount rate with respect to these leases was 7.0 %.

The Company accounts for income taxes using the asset and liability method.

7 unchanged sentences

With non-qualified stock options (“NQSOs”), on the other hand, the employer is typically eligible to claim a deduction upon its employee's exercise of the NQSOs.

Alpha Pro Tech, Ltd.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Contingencies

7 unchanged sentences

The final outcome of the Lawsuit, including the potential amount of any recovery for the Company’s claims, is uncertain.

Any potential recovery represents a gain contingency in accordance with ASC 450, Contingencies, that has not been recorded as the matter was not resolved as of March 31, 2024.

Any potential recovery represents a gain contingency in accordance with ASC 450, Contingencies, that has not been recorded as the matter was not resolved as of June 30, 2024.

Any recovery will be recorded when received.

Alpha Pro Tech, Ltd.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The Company is subject to various pending and threatened litigation actions in the ordinary course of business.

1 unchanged sentence

Subsequent Events

The Company has reviewed and evaluated whether subsequent events have occurred from the condensed consolidated balance sheet date of March 31, 2024 through the filing date of this Quarterly Report on Form 10-Q that would require accounting or disclosure and has concluded that there are no such subsequent events.

The Company has reviewed and evaluated whether subsequent events have occurred from the condensed consolidated balance sheet date of June 30, 2024 through the filing date of this Quarterly Report on Form 10-Q that would require accounting or disclosure and has concluded that there are no such subsequent events.

Alpha Pro Tech, Ltd.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements